Tata Sponge Iron Q4 net plunges 79% to ₹8.57 cr on lower sales

Tata Sponge Iron, an associate firm of Tata Steel, today reported a drop of 79 per cent in its net profit on a consolidated basis at ₹8.57 crore for the fourth quarter ended March 31 on account of lower sales.

The company had posted a net profit of ₹40.50 crore during January-March 2014.

Its net sales dipped 30 per cent to ₹159.85 crore during January-March 2015 as against ₹228.36 crore during the fourth quarter of the previous fiscal.

Total expenses of the firm stood at ₹166.15 crore during the quarter as against ₹181.64 crore in the corresponding quarter of the previous fiscal.

Its revenue from sponge business fell by 33.16 per cent to ₹148.92 crore, while power business revenue also saw a decline of 74 per cent at ₹4.58 crore during the quarter under review.

The company said it has disclosed ₹32.50 crore as “contingent liability” with regard to the bank guarantee (BG) towards a coal block in the wake of a High Court order to keep the BG valid till May 28, 2015 by which the Court had asked the Coal Ministry to take a decision on it.

Coal Ministry in November 2012 had issued notice to the firm for invoking BG towards a block but the Court had granted a stay and asked Ministry to take decision by May 28.

It also said that during the pendency of the matter the Supreme Court had cancelled allocations of 204 coal blocks including one Radhikapur East mine allotted to it in which it had made investments of ₹180.74 crore as on March 15 this year.

As per the Ministry’s directive to furnish expenses by previous allottees, the company said it has submitted the details.

“Based on rules and necessary legal opinion obtained by the company, the provision made during the quarter ended September 30, 2014 on coal block expenses amounting to ₹6.27 crore has been reversed during the current quarter”, it said.

About ₹23.54 crore other income, it said it included ₹12.95 crore “being reversed of provisions made in earlier year in respect of indirect tax litigation based on favourable orders from competent authorities.”

For the entire 2014-15 fiscal, the firm recoded a 9.14 per cent decline in its net to ₹91.94 crore against ₹101.19 crore.

Net sales were almost stagnant at ₹766.23 crore during the last fiscal as against ₹762.72 crore. Total expenses for the fiscal stood at ₹703.45 crore as against ₹654.64 crore in 2013-14.

The company’s shares were trading 8.71 per cent down at ₹714 per scrip during afternoon session on the BSE.